Wildfire costs are surging — but much of the damage in Europe isn’t insured

European Wildfire Losses Expose a Deep Insurance Gap

Another summer of devastating wildfires across France, Spain and Greece has pushed the cost of disaster recovery sharply higher — yet a significant portion of the damage is falling outside insurance policies. CEOs from Zurich Insurance, Swiss Re and Munich Re warned this week that Europe faces a growing 'protection gap,' where the value of assets exposed to fires far outstrips what is covered by insurance.

The numbers illustrate the shift. The insurance industry paid out $56.3 billion for wildfire-related losses in the 2010s, six times the $8.7 billion paid in the 2000s, according to an Allianz Commercial report in June. For just five Eurozone countries — Greece, Spain, Portugal, France and Romania — the cost of wildfires and heatwaves through the end of July had reached an estimated €3.1 billion, above the EU's average full-year estimate of €2.5 billion, according to Financial Times calculations.

Zurich Insurance Group CEO Mario Greco told CNBC that all weather risks remain insurable but that the price tag is rising fast. He pointed to the experience of the U.S. and Australia, where wildfire mitigation requires 'systemic intervention' from local jurisdictions and governments — steps many European authorities have yet to take. Meanwhile, Swiss Re CFO Anders Malmström noted that much of Europe's wealth remains unprotected, as more valuable homes are built in vulnerable areas without adequate coverage.

Why the Industry Sees Danger and Opportunity in the Coverage Void

The U.S. Lesson: When the Tab Hits Public Budgets

The Los Angeles wildfires in early 2025 cost insurers Munich Re and Hannover Re a combined $1.9 billion in the first quarter alone. Swiss Re Institute labelled the event the costliest wildfire ever measured, with insured losses of $40 billion. That experience, executives argue, shows that Europe's current patchwork of cover leaves a dangerous burden on households and — when governments are forced to step in — on public finances. The fiscal drag from emergency responses, damaged infrastructure and lost economic activity can strain national budgets for years.

Zurich’s Business Case for Prevention

Zurich Insurance has responded by creating a dedicated unit, Resilient Solutions, designed to help clients — both corporate and public — build prevention and mitigation measures for risks ranging from cyber attacks to climate change. CEO Mario Greco stressed that wildfires can be prevented and mitigated, but that countries and local governments are often slow to act because 'they don’t really visualize, they don’t feel the risk yet.' By offering advisory and risk-engineering services, Zurich is positioning itself not just as a bearer of risk but as a partner in reducing it — a model that could expand the addressable market for insurance rather than simply raising premiums.

Where the Coverage Void Hurts Most

Allianz identified the sectors most exposed to wildfire losses: utility and energy companies, real estate and construction, agriculture, and transport. In Europe, the pain is particularly acute because standard household policies often exclude wildfire damage, unlike in some U.S. states where coverage is more widespread. The result is that even moderate fires can leave families and small businesses facing total uninsured losses, while lenders and local economies suffer knock-on effects.

The Calculus for Governments and Insurers

Both Zurich Insurance and Munich Re said their own exposure to the current European fires is limited, underscoring the scale of the protection gap. Munich Re CFO Andrew Buchanan argued that the industry has a role in 'backstopping countries' by providing liquidity when disasters strike, but also that the sequence must start with risk assessment, then mitigation, and finally pricing and insurance. For governments, the choice is stark: invest now in fire prevention and enforce building codes in vulnerable zones, or absorb ever-larger uninsured losses from future summers that are almost certain to bring more extreme heat.

What Insurers and Governments Should Do Next

• For insurers: Build out dedicated prevention and resilience units — as Zurich has done with Resilient Solutions — to create a fee-based advisory stream and deepen client relationships, turning the protection gap into a growth opportunity.
• For insurers: Develop parametric insurance products tied to heat indexes or satellite-detected fire perimeters, which can pay out quickly without lengthy loss assessments and fill the gap where traditional cover is uneconomical.
• For government officials: Mandate wildfire risk mapping before issuing building permits in high-risk zones, drawing on the €3.1 billion already incurred by just five Eurozone countries this summer as a cost-of-inaction benchmark.
• For homeowners and small businesses: Check existing property policies for explicit wildfire exclusions — many European household policies do not include fire spread from wildlands — and explore standalone natural catastrophe policies where available.